Colorado Senator Kevin Lundberg (R, Berthoud) has introduced Senate Bill 6, which would introduce an element of free market enterprise into the state’s Medicaid program for the elderly. Basically, SB6 would allow seniors who qualify for Medicaid to opt out of the traditional Medicaid program to instead receive 70% of their expected benefit amount, to be used for health care services at a provider of their choice. The patient’s doctor would determine the level of care needed, and the state would determine the amount that care would cost the Medicaid program over the next year. From there, the program would take 70% of that total amount and load it onto a debit card (in monthly increments over the course of the year) for the participant to use for health care services, including long-term care, assisted living, in-home care, medications, health, and dental services.

The benefit to the participants is that they would not be required to use only doctors and facilities who accept Medicaid. They would essentially be paying cash for their care (their own money, plus the money on the debit card provided by the alternative Medicaid program), so they would be free to use any provider they wanted.

The benefit to the state is that it would be paying 70% of the amount that it would otherwise pay if the participant stayed in the traditional Medicaid program.

But this is not a win-win bill. Seniors who qualify for Medicaid have very little in the way of assets or income. Medicaid is a safety net that allows seniors to receive certain health care services after their own assets have been exhausted. It covers long term care (with restrictions on which providers can be used), which Medicare does not. Being on Medicaid may not be an ideal situation in terms of having a choice of providers or what kind of care can be financed (in-home versus nursing home, for example), but it’s significantly better than having no care at all.

The problem with a proposal like SB6 is the practical aspect of where the participants are going to get the rest of the money needed to fund their care, and the possibility that some seniors may be drawn to the program without fully understanding it. If it passes, it will likely be heralded as a “free market” alternative to a government program, and the benefit of provider choice will likely be a major selling point. But the financial realities might not work out for many people. The very nature of Medicaid means that people who qualify for it are low-income. In addition, services provided through the Medicaid program are heavily discounted when compared to “retail” prices for similar services (this is the way all insurance networks operate, but the government gets significantly discounted rates through their Medicare and Medicaid programs, in exchange for a very large volume).

So it’s likely that patients would be on the hook for far more than 30% of the costs of their care if they opted for this program. The program would give them 70% of what Medicaid would have paid for their care if they had stayed in the traditional program. But that does not translate to 70% of what their care will cost if they seek out providers outside of the Medicaid program. In addition to the extra 30% they would have to pay to get back up to the full price of Medicaid-provided care, they will also have to come up with the extra money needed to secure care outside of the Medicaid network. This could be a challenge for someone with an income low enough to qualify for Medicaid in the first place.

This bill was first introduced last year, and didn’t pass. So its future is doubtful. But if it does pass, hopefully all of the nuances of it will be thoroughly explained to eligible Medicaid enrollees before they make the switch away from the traditional program. The program would be voluntary, and does include a provision to allow participants to withdraw with 30 days notice provided to the state. It may end up being a good fit for some seniors, but if mis-handled (for example, by encouraging seniors to join the program without adequate explanation), it could also be an erosion of a vital safety net for cash-strapped seniors.

Insurance Shoppers in the News

A glowing article about the Colorado Health Insurance Insider in MedScape from WebMD titled ""Villains" of Healthcare? Not These Insurance Agents": (read the article)
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